CHICAGO, Aug 3 (Reuters) – U.S. grain handlers are scrambling to find space for mountains of corn and soybeans that is expected to overwhelm their already jammed storage facilities in the coming weeks, leading to a surge in construction of temporary grain bins.
Many elevators still are holding on to last year’s supplies as weakness in the futures market has not provided them an opportunity to unload it for a profit.
“It is unlikely to get the grain bins emptied between now and harvest,” said Kirk Nelson, director of marketing and sales for grain systems group at Behlen Grain Systems, which makes the bins.
Near-perfect growing conditions in the field have bolstered expectations of bumper yields and forced merchants to hastily erect temporary storage bins for crops.
The biggest demand for bins is being seen in the western reaches of the U.S. Midwest in states such as Nebraska.
Industry-wide, orders for temporary storage bins, which typically hold between 750,000 and 1 million bushels of grain, were up at least 30 percent from a year ago, said Roger Price, director of North American grain sales and service at GSI. GSI manufactures steel farm bins, commercial storage grain bins and grain silos.
Price said demand for GSI’s bins was significantly higher but declined to give specific sales figures for the company.
The temporary storage bins are made of an array of steel panels arranged in a ring. The panels range in height from 3-1/2 feet (1.07 meters) to 8 feet. After the grain is loaded in the ring, operators place a tarp over it to protect it from the elements. The grain can be aerated with fans.
Construction of the temporary bins takes about a week.
A speedy planting has pushed the crop development schedule forward, which compounds the need for storage at elevators.
According to the U.S. Agriculture Department, 30 percent of corn has already reached the dough stage, five percentage points above the five-year average. The soybean crop also is ahead of schedule, with 54 percent of the crop setting pods, compared with the five-year average of 44 percent.
The amount of corn and soybeans at these stages of maturity is the third most ever for this time of year and will allow farmers to move up their harvest plans. But demand is unlikely to accommodate the faster-arriving crop, so grain handlers will have to hold on to it for longer than usual, even if they have contracts in place to sell it.
That creates additional incentives to build temporary storage instead of just piling it outside elevators. Corn and soybeans left in the sun in hot temperatures are more susceptible to mold when the weather cools off.
Temporary storage bins generally cost 20 cents to 50 cents per bushel of capacity, according to Nelson. Grain handlers are more than willing to pay that as losses for crops piled on the ground can reach as much as 20 percent.
But the forecasted supply of massive crops will likely overwhelm the increased demand for temporary construction bins, forcing dealers to build traditional ground piles right next to their shiny new bins.
“You will see people putting it outside of their elevators,” Price said. “In fact, you will probably see more of that than you ever have.”